Real Estate Realist

When the big money guys step out from under the burden of propriety that accompanies their positions of leadership at places like the Federal Reserve, or the International Monetary Fund, they sure can get to the point, can’t they. Kenneth Rogoff, formerly the chief economist with the IMF, in so many words is saying…”this credit crisis, you ain’t seen nuthin’ yet!”. FDIC, you might want to consider another premium increase for your member banks too, because like lots of others in the know, Rogoff fully expects the wave of coming bank failures to include at least one whopper. The IndyMac failure alone will likely tap the FDIC for about 15 percent of its cash on hand at the time of the failure, and the prospect is for the next big bank failure to make the IndyMac payoff look like chump change.

The deepening toll from the global financial crisis could trigger the failure of a large US bank within months, a respected former chief economist of the International Monetary Fund claimed today, fuelling another battering for banking shares. Professor Kenneth Rogoff, a leading academic economist, said there was yet worse news to come from the worldwide credit crunch and financial turmoil, particularly in the United States, and that a high-profile casualty among American banks was highly likely. “The US is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say the worst is to come,” Prof Rogoff said at a conference in Singapore. In an ominous warning, he added: “We’re not just going to see mid-sized banks go under in the next few months, we’re going to see a whopper, we’re going to see a big one — one of the big investment banks or big banks,” he said.